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Capturing Corporate Social Footprint Beginners Guide Social Impact Reporting
Capturing Corporate Social Footprint Beginners Guide Social Impact Reporting
Capturing Corporate Social Footprint Beginners Guide Social Impact Reporting
Social Footprint
A Beginner’s Guide to
Social Impact Reporting
1
Emphasizing the ‘S’ in ESG: Social Impact Reporting as a Corporate Practice 4
Common Corporate Social Impacts 5
2
Introduction
With sustainability now a mainstream corporate concern, companies’ social footprint – an
organization’s positive and negative externalities on society – is under scrutiny. Consumers, investors,
employees, and affected communities increasingly expect companies to act as change agents to help
address society’s most significant challenges, including poverty alleviation, ending discriminatory
practices, and improved access to health services. Sustainability disclosure
is now at the top of the
As a result of these demands, corporations are increasingly sharing their environmental, social and
agenda for the world’s
governance (ESG) performance with the public. The events of 2020 accelerated the practice as
largest investors, the
investors, governments, and consumers alike placed more attention on the ‘S’ of ESG. This trend in
reporting is dramatic: in less than three decades, sustainability reporting among companies has risen
world’s largest companies
from 12% to 80% among large and mid-cap companies.1
and regulators in almost
every major market.”
Social impact reporting – measuring and communicating the positive socioeconomic effects of an Janine Guillot, Chief Executive
organization’s activities – is included in this broader trend. Once only practiced by non-profits and of the Sustainability Accounting
social enterprises, social impact reporting has been increasingly used by corporations to demonstrate Standards Board (SASB) *
their corporate citizenship commitments and their value to society at large. Companies ranging from
SurveyMonkey to Standard Chartered engage in the practice, whether producing standalone social
impact reports or integrating social impact information into their existing sustainability or annual
reports.
Should your company include social impact reporting as part of your sustainability communication
activities? And, if yes, how? This guide offers companies a general overview of social impact
reporting, outlines some of the practice’s core benefits, and presents practical tips on how to
effectively communicate your company’s social impacts.
3
Emphasizing the ‘S’ in ESG: Social
Impact Reporting as a Corporate
Practice
Social impact reporting is a sub-set of sustainability reporting, a catch-all term to include reporting
practices by organizations on their sustainability performance. Much like the practice of corporate social
responsibility itself, there is currently no standardized approach to sustainability reporting.2 Sustainability
reporting – also commonly referred to as CSR reporting or ESG reporting – can include information
ranging from a firm’s greenhouse gas emissions to its corporate governance practices.
On the other hand, social impact reporting is a specific reporting practice, which measures the positive
socio-economic impacts of an organization’s initiatives or activities on society. Environmental impacts are
excluded, and there is a strong focus on quantifying impact over time, such as monetizing a company’s
total contribution to GDP or tabulating its effect on community health.
Unlike other forms of sustainability reporting that focus on a company’s immediate activities and effects,
social impact reporting seeks to measure the company’s indirect impacts on stakeholders. Indirect impacts In our inaugural Social
include economic growth through supply chain spending, indirect job creation, improved community Impact Report, we
health outcomes, and positive societal results from its downstream activities. For example, Starbucks
outlined the progress
measures its impact on fostering diverse communities partly through its lower-tier supply spend on
we are making as well
minority-owned businesses, while the global pharmaceutical company, Teva, assesses the indirect effect of
as the areas where we
its economic activities by the number of jobs supported and contribution to GDP across countries.3
need to do better.”
Capturing the extent of a firm’s indirect social footprint can prove challenging and often requires SurveyMonkey, 2020 Social
significant data analysis, proxy indicators, and stakeholder engagement. In response to these challenges, Impact Report †
new impact measurement techniques have emerged over the past few years to leverage data and impact
models to better understand the connection between a firm’s activities and its long-term socio-economic
effects.
4
Common Corporate Social Impacts
Broadly speaking, a social impact refers to the positive and negative effects of a company’s operational activities on society, whether those be direct or indirect.
The nature and scope of a company’s social impacts can vary widely depending on industry, size, region, etc. Some of the most common corporate social impacts
are listed below.
• Diversity and inclusion: representation of minorities and historically • Community health and wellbeing: increased access to essential
marginalized groups, the composition of executive board and senior services and infrastructure as an indirect result of company
leadership positions, wage equality. operations.
• Corporate philanthropy: Corporate giving programs, social • Human rights protections: improved working conditions among
investments, grants, employee volunteer programs. suppliers’ workforces, elimination of child labor.
5
Creating Value: The Business Case
Behind Social Impact Reporting
Social impact reporting is not just a communication exercise. Improving brand competitiveness,
attracting talent, maximizing investments and mitigating reputational risks are a few of the benefits
underpinning the business case for measuring and communicating a firm’s social impacts.
6
Creating Value: The Business Case Behind Social Impact Reporting
Ensuring Compliance
With regulatory trends on ESG-related disclosures accelerating, companies can utilize their social impact data to report and demonstrate compliance. Mandatory
reporting on the social impacts of a company’s supply chain, in particular, is becoming widespread, including California’s Transparency in Supply Chains Act and
the proposed EU directive on supply chain due diligence. Companies already measuring their social impact data will be better equipped to meet these emerging
regulations.
Maintaining Competitiveness
Collecting and reporting on social impacts can provide a competitive edge as a supplier or when tendering for a project. Governments and companies alike are
increasingly considering a supplier’s supply chain sustainability in major procurement decisions. In Canada, purchasers in the provincial government of British
Columbia must consider social impact with respect to potential suppliers for all major requests for proposals.11 Supplier sustainability programs are growing among
top-tier companies, with companies such as 3M and SurveyMonkey prioritizing suppliers with a demonstrated focus on sustainability, including their social impact
policies and practices.
7
Communicating Performance:
Five Steps for Effectively Reporting
on Social Impacts
Given the business benefits and growing demand from stakeholders, many companies are scrambling
to tabulate their social impacts. These impacts may be simple to identify, but challenging to measure.
Environmental reporting benefits from universally recognized approaches12 and easily quantifiable
metrics, such as greenhouse gas emissions and water usage. Reporting on social impacts, on the other Taking Action
hand, is less developed due to challenges in capturing the extent of a firm’s social footprint. However,
• Conduct regular materiality assessments:
with emerging measurement tools and greater data availability on suppliers, capturing your social impact
Undertake a materiality assessment every
need not be a herculean undertaking. Here are five steps for your organisation to consider when reporting
two to three years to help identify key ESG-
on your firm’s social impacts.
related impacts, including social impacts.
Before collecting data and contacting stakeholders, decide on the report’s scope and identify the topic identify relevant ESG priorities and impact
boundaries for each of the material topics covered.13 Are you including subsidiaries’ impacts or only the areas to include within the report.
parent company’s impacts? What are the temporal and topic boundaries of the report? Narrow reporting
• Consider report’s target audience: While
boundaries can draw criticism as many organizational impacts – both positive and negative – occur with a
investors are key readers, employees and
firm’s supply chain.14 Ensure your analysis looks beyond the firm’s immediate activities to include indirect
consumers make up a growing portion of
impacts, such as economic growth across the supply chain or the long-term effects of educational
readers of a corporation’s annual report.
programs.
Integrate these readers’ interests and needs
when determining the report’s scope.
8
Communicating Performance: Five Steps for Effectively Reporting on Social Impacts
Taking Action
• Benchmark against peers’ sustainability
Step Two: Determine Reporting Format reports: Gain a greater understanding
on what information similar corporations
Social impact reporting can be integrated into existing public disclosures, or be a separate
are disclosing, which standards and
communication strategy. Consider whether to produce a standalone report or include social
frameworks are used, and overall report
impacts disclosures within a sustainability report, annual report, or on the company’s website. Dell
style.
Technologies, for example, produces standalone social impact reports, while Starbucks integrates
social impact disclosures into its annual sustainability report. Some companies, like Standard • Investigate digital reporting formats:
Chartered, produce country-specific socio-economic impact reports to further detail regional impacts. Consider formats that facilitate sharing
information across multiple distribution
channels, such as social impact
During this stage, explore whether you would like to align reporting with existing impact frameworks, infographics to be shared on your
such as the UN’s Sustainable Development Goals (SDGs). For example, Salesforce maps its social company’s social media channels.
impacts by U.S. dollar amount across each of the SDGs, including mapping its customer base and
employee giving to its respective contribution to individual SDGs. Investigating how industry peers • Consider reporting more broadly on ESG
are reporting on social impacts can also help provide direction on the format of your report and topics using internationally recognized
possible frameworks to use. standards: If integrating your social
impact reporting within your company’s
broader sustainability or annual report,
consider aligning reporting to international
sustainability reporting standards such
as the GRI standards and Taskforce on
Climate-related Financial Disclosures
(TCFD) to guide what ESG-related
information to include in public reports.
9
Communicating Performance: Five Steps for Effectively Reporting on Social Impacts
10
Communicating Performance: Five Steps for Effectively Reporting on Social Impacts
11
Communicating Performance: Five Steps for Effectively Reporting on Social Impacts
12
Communicating Performance: Five Steps for Effectively Reporting on Social Impacts
Social impact reporting captures a company’s positive externalities that would otherwise be overlooked
in a traditional sustainability report. By leveraging data and new measurement techniques, social impact
reporting can attribute job creation, greater human rights protections, inclusive economic growth, and
other indirect impacts to a company’s operations. Visibility over these direct and indirect impacts will
be increasingly important in communicating with stakeholders and meeting investors, governments, and
consumers’ demands for greater transparency on ESG-related topics.
Investors are increasingly
asking a different
question: not whether
Social impact reporting is not an end to itself; however, understanding the effects a company has on a company has good
society is vital to achieving sustainability as well as contributing to better stakeholder engagement. intentions but whether it
Companies who ignore their social footprint risk alienating stakeholders while fostering strong has the strategic vision
stakeholder relations and leveraging social impacts can lead to better business relationships and and capabilities to achieve
outcomes.15 and maintain strong
ESG performance. That
means companies need
Don’t know where to start? Sustainalytics offers corporate Supply Chain ESG Solutions, including a
to start measuring and
Socio-Economic Impact Reporting service to assist firms in conducting social impact reporting. Contact
us today to connect with our team of experts and learn more.
reporting the results of
their initiatives. Instead
of communicating their
policies,…they must
communicate outcome
metrics.”
George Serafeim, Harvard
Business Review §
13
Resources for Companies
• Global Reporting Initiative (GRI): universal voluntary reporting standards for organizations to report
on their sustainability impact.
• Value Reporting Foundation: provides companies with a comprehensive suite of tools to assess,
manage and communicate value. The foundation is the result of the merger between the former
International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board
(SASB). Progress Made Real
(reports) share how we
• Impact Management Project: a forum for building global consensus on measuring, managing and
will create a positive and
reporting impacts on sustainability.
lasting social impact on
• Social and Human Capital Protocol: provides best-practice principles and processes in integrating humankind and the planet
social risks and opportunities into corporate decision-making. through 2030 – using
our reach, technology
• SDG Compass: provides guidance for companies on how they can align their strategies as well as
measure and manage their contribution to the realization of the Sustainable Development Goals
and people. Through
(SDGs).
our annual reporting, we
demonstrate how we are
• ISO 26000:10 Social Responsibility: provides guidance on assessing an organization’s commitment making this progress real.”
to sustainability, shares best practices relating to social responsibility, and assists organizations in DELL Technologies ¶
translating CSR principles into effective actions.
14
References
1
KPMG (2020). ‘The Time Has Come: The KPMG Survey of Sustainability Reporting 2020 KPMG,’ KPMG, accessed (21.05.21) at: https://assets.kpmg/content/
dam/kpmg/xx/pdf/2020/11/the-time-has-come.pdf. Survey sample comprises the top 100 companies by revenue in 52 countries and jurisdictions (N=5,200
companies).
2
At this time, companies can choose to draw from a variety of global reporting standards such as the Global Reporting Initiative (GRI) standards, the Integrated Reporting
Framework, or the Sustainable Accounting Standard Board (SASB). However, these reporting standards currently lack a comprehensive and standardized approach to
measuring social impacts – both direct and indirect. Harmonization efforts across reporting standards have increased, with IIRC and SASB joining to create the Value Reporting
Foundation.
3
Teva (2020). “Teva Global Economic Impact Report,“ Teva, accessed (17.06.21) at: https://www.tevapharm.com/globalassets/tevapharm-vision-files/teva
economicimpactreport_global_final.pdf
4
Stone, E. (2018). “Take 5 How Companies Benefit from Corporate Social Responsibility,“ Northwestern University, accessed (15.06.21) at: https://insight.kellogg.northwestern.
edu/article/benefits-of-corporate-social-responsibility
5
Peters, A. (2019). “Most millennials would take a pay cut to work at an environmentally responsible company,” Fast Company, accessed (25.05.21) at: https://www.fastcompany.
com/90306556/most-millennials-would-take-a-pay-cut-to-work-at-a-sustainable-company
6
Network of Executive Women (NEW) (2019). “Welcome to Generation Z,“ NEW, accessed (15.06.21) at: https://www.newonline.org/genz
7
Benevity (2018). “Benevity study links employee-centric corporate goodness programs to big gains in retention,” Benevity, accessed (25.05.21) at: https://benevity.com/
media/media-releases/benevity-study-links-employee-centric-corporate-goodness-programs-big-gains
8
Eswaran, V. (2019). “The business case for diversity in the workplace is now overwhelming,“ World Economic Forum, accessed (17.06.21) at: https://www.weforum.org/
agenda/2019/04/business-case-for-diversity-in-the-workplace/
9
Marsh, A. (2020). ‘‘Social Washing’ Is Becoming Growing Headache for ESG Investors,’’ Bloomberg, accessed (17.06.21) at: https://www.bloomberg.com/news/articles/2020-04-
09/-social-washing-is-becoming-growing-headache-for-esg-investors
10
Bové, A. and Swartz, S. (2016), ‘Starting at the source: Sustainability in supply chains,’ McKinsey & Company, accessed (24.06.21) at: https://www.mckinsey.com/business-
functions/sustainability/our-insights/starting-at-the-source-sustainability-in-supply-chains
11
Province of B.C., “Social Impact Procurement Guidelines,” official website for the Province of B.C., accessed (15.06.21) at: https://www2.gov.bc.ca/gov/content/governments/
services-for-government/bcbid-resources/reference-resources/social-impact-procurement-guidelines
15
12
Environmental reporting standards and suggested indicators include those provided by the CDP (formally known as the Carbon Disclosure Project), Global Reporting Initiative
(GRI), Task Force on Climate-related Financial Disclosures (TCFD), and Greenhouse Gas Protocol.
13
Material topics can be identified and prioritized by the significance of the firm’s social impact and their influence on stakeholders’ decision-making. GRI (2016), “GRI 101:
Foundation 2016,“ Global Reporting Initiative, accessed (16.06.21): https://www.globalreporting.org/standards/media/1036/gri-101-foundation-2016.pdf#page=18
14
Bové, A. and Swartz, S. (2016), “Starting at the source: Sustainability in supply chains, “ McKinsey & Company, accessed (25.05.21) at: https://www.mckinsey.com/business-
functions/sustainability/our-insights/starting-at-the-source-sustainability-in-supply-chains
15
Henriques, A. (2015). ‘Corporate Impact: Measuring and Managing Your Social Footprint,’ Routledge
† https://prod.smassets.net/assets/cms/cc/uploads/SurveyMonkey-social-impact-report.pdf
‡ Ibid
§ https://hbr.org/2020/09/social-impact-efforts-that-create-real-value
¶ https://corporate.delltechnologies.com/en-us/social-impact.htm
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16
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